Energy cost 'may double'

ELECTRICITY from new atomic power stations will cost twice as much if the nuclear industry is privatised, an Independent on Sunday inquiry has discovered.

Estimates from both within and outside Nuclear Electric - which put its case for privatisation to the Government last week - show that there will have to be huge increases in prices to attract private investment into the business.

And if the state-owned firm, which runs all the nuclear power stations in England and Wales, succeeds in replacing existing capacity with new plants, consumers may eventually have to pay double the pounds 1.18bn they now provide each year to subsidise nuclear power.

In addition, Nuclear Electric wants the Government to free it from the 'unprivatisable risks and liabilities' of its six ageing Magnox reactors - which may well increase the cost to the public even more.

The firm is pressing for rapid privatisation because it realises that the Government will never again finance the huge cost of a new nuclear power station. It says: 'The company can and should be privatised at the earliest opportunity.'

Its proposal - made in a four-volume submission to the Government's Nuclear Review, which will decide the future of the industry - will be taken seriously by ministers because the firm has done startlingly well since being set up in 1990. It has increased its output by almost 45 per cent, doubled productivity - and cut 4,500 jobs. It has increased its market share from 16 per cent of the electricity sold in England and Wales to 23 per cent, and has dramatically reduced the number of accidents at its reactors.

Yet the average home still subsidises nuclear power by an estimated pounds 54 a year. In all, this hand-out, which is supposed to end in 1998, will total pounds 9.2bn.

Between 1975 and 1988 the UK Atomic Energy Authority alone received more than pounds 10bn (at 1986-7 prices), compared with only about pounds 156m for research on energy conservation and pounds 154m for all renewable sources - such as solar, wind, tide and wave - put together.

For years, as the nuclear industry now admits, atomic energy was also heavily subsidised by coal-fired electricity, even though the Central Electricity Generating Board and ministers insisted that it was cheaper to get electricity from the atom than from coal.

Nuclear Electric was set up, complete with generous subsidy, after it became clear the power stations were unsellable. Michael Heseltine, President of the Board of Trade, has said that 'the subsidy is to deal with the decommissioning of old and unsafe plants' and Nuclear Electric added that it was 'not intended to be a subsidy for our ongoing commercial operations'. But the firm has admitted spending pounds 2bn of it on building its new Sizewell B Pressurised Water Reactor.

Nuclear Electric now wants to build twin reactors next door at a cost of pounds 3.5bn, but realises that this requires private capital. It admits that electricity bills will rise because investors will require an 11 per cent return on their capital, compared with 5 per cent by the state. It estimates that electricity from Sizewell C will cost 3.7p per unit - much more than the average cost of 2.4p for electricity and 3.1p for nuclear electricity.

Dr Gordon MacKerron, one of Britain's leading experts on the costs of power generation, says that the eventual figures will be much higher. 'Nuclear Electric has set out to get the numbers as low as they can squeeze them. They are neither plausible nor credible.'

An unpublished report by the Hoskyns Group of management consultants, financed by British Coal, estimates that electricity from Sizewell C could cost between 5.82p and 7.35p per unit. A Greenpeace study estimates that the public could have to pay a pounds 2.37bn subsidy if Nuclear Electric supplied a quarter of the country's electricity from new stations.

Nuclear Electric says nuclear power deserves such special treatment because it will help provide security of supply and because reactors do not produce the pollution that cause acid rain and global warming.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Metail Ltd: Business Development Manager for Asia Pacific

£35,000 - £40,000 based on experience : Metail Ltd: As a Business Development ...

Guru Careers: Product Manager / Product Owner

£30 - 40k (DOE) + Bonus & Benefits: Guru Careers: A Product Manager / Product ...

Recruitment Genius: Car Sales Executive - £17,000 Basic, OTE Uncapped

£17000 - £27000 per annum: Recruitment Genius: The Company are looking for a S...

Recruitment Genius: 1st / 2nd Line Technical Analyst

£16000 - £18000 per annum: Recruitment Genius: A 1st / 2nd Line Technical Anal...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate